Yellow Cab Settles Medicaid Fraud Charge (Whistleblower Lawyer)

What do Yellow Cabs and Medicaid Fraud have in common? If you live in Dallas, a lot. In 2012 three former Yellow Cab employees blew the whistle on their employer. The three said that cab companies were bilking Medicaid and taxpayers for taking patients to appointments. This month the Department of Justice intervened and settled the case for over $1.1 million.

Yellow Cab Medicaid Fraud Scheme

Robert Spence worked for Irving Holdings as a cab driver. Irving Holdings operates as “Yellow Cab” in the Dallas area. Mike Jones also worked for the company; he was the cab company’s Medicaid Compliance Officer. The third whistleblower, Cheryl Jones, was a scheduler / dispatcher. Together the three had a pretty good idea of how Yellow Cab ran its Medicaid operations.

According to their lawsuit, Yellow Cab derives a substantial amount of revenue from the government’s Medicaid program. Low income Medicaid recipients frequently rely on cabs to get to and from appointments. Yellow Cab had a contract with the State of Texas to transport these folks.

Mike Jones claims that while he was the company’s compliance officer, he regularly alerted the company to improper billing practices. According to him, “[after he] found too much fraud, he was terminated, and the company never hired another Medicaid Compliance Officer because they no longer wanted to have written records of the Medicaid fraud.”

Although fired, Mike’s wife Cheryl continued working for the company. She too was fired, however, after her mother sued Yellow Cab.

Only certain drivers at Yellow Cab were allowed to transport Medicaid patients. Each of those drivers had to sign a form indicating that they understood the rules for transporting patients. Drivers that violated the rules would be fined. According to Cheryl, however, Yellow Cab kept the fine money and never alerted the state or paid back the money!

Although the company told drivers not to commit fraud, everyone profited from it. One senior manager wrote a memo to drivers that said, “Pharmacy trips are being turned in with clients stating that the drivers told the clients they can go to a pharmacy or to a store and pick up wire transfers or go shopping. This is fraud!!!!”

Despite strong memos condemning Medicaid fraud, the three whistleblowers say that in reality, the company ignored it. According the lawsuit, “[A]ll of the threats made by Finkel [the manager] were simply window dressing to make it appear that he cared about the fraud taking place.”

Sometimes claims would get submitted or paid more than once. Again, the company did not return the money or notify the state of the program.

“In the course of his duties, Relator Mike Jones also discovered multiple instances where the company had been paid for a claim twice or even three times by the State of Texas among others. When he would point this out to George, Controller of Yellow Cab, her response would be ‘If they’re [the State of Texas] too stupid to pay a claim twice I’m going to put that money into Account 4000 and make it disappear!’ Account 4000 was a slush fund used by the company which contained money that should have been reported as income to the IRS, but taxes were not paid on monies put into that account.”

Medicaid Fraud and the Federal False Claims Act

Medicaid is paid with both state and federal tax dollars. Under the False Claims Act law, whistleblowers who report fraud can earn a cash award up to 30% of whatever the government gets from the wrongdoer.

To qualify for the award, the whistleblower must be the “original source” of the information. Second hand information, rumors or information from public sources (media, lawsuits) doesn’t count.

Generally, awards are only paid to the first person to file a claim. That means delaying can cost you the opportunity to receive an award.

Awards are earned by first filing a lawsuit under the False Claims Act in federal court. That means calling a Medicaid fraud hotline won’t get you a big award.

Approximately 30 states and the District of Columbia have state Medicaid fraud laws that cover the state portion of Medicaid funding. (Medicare is fully funded by the federal government, not the states.)

Government Intervenes, Issues $1,125,000 Medicaid Fraud Fine

Under the False Claims Act, cases are filed “under seal” meaning they are secret. While the case is under seal, the government can investigate the claims and decide whether it wishes to take over the case. The court controls how much time the government has to investigate in secret.

Ultimately, the Justice Department must intervene and takeover the case or allow the whistleblower’s own attorney to do so.

In this case, the government intervened and settled the case on June 27th, 2016 for $1.125 million. The companies paying the settlement are Irving Holdings Inc. (“Yellow Cab”), JetTaxi, Dallas Taxi, US Cab, Terminal Taxi and Yellow Checker Shuttle. Several of the officers are also liable including the manager who wrote the allegedly phony warnings and the company’s controller who bragged about pocketing overpayments.

All of the parties were allowed to settle without admitting wrongdoing.

Three Whistleblowers Awarded $202,500

Medicaid fraud may not pay but reporting it certainly does. From the $1.1 million assessed in penalties, the three whistleblowers were awarded a total of $202,500.

In announcing the settlement and the award, Dallas’ U.S. Attorney John Bales said, “The public is besieged by fraud, guile, and recklessness every single day. Our office will not tolerate the mistreatment of taxpayer money, whether by corporations or individuals.”

Lessons Learned

Medicare and Medicaid fraud costs taxpayers billions of dollars each year. It is impossible for auditors to be everywhere or uncover every scheme. That is why whistleblowers have become so important. Not only are they our first line of defense against corporate greed and corruption, they also save taxpayers billions of dollars annually.

In 2014, the federal government paid over $435 million to whistleblowers. Our clients received over $100 million in awards. Unfortunately, most would-be whistleblowers don’t know how to report fraud, don’t know how to qualify for a large award and don’t know about the False Claims Act’s powerful anti-retaliation provisions.

Obviously this case demonstrates how whistleblowers can get paid for reporting fraud. A second lesson is that whistleblowers can join forces. Here all three Yellow Cab workers had different insights into Yellow Cab’s Medicaid fraud scheme. They each had a different vantage point on the fraud including the prospective of a driver and of two compliance officers. By putting their knowledge together, two will soon be receiving over $200,000 for their efforts. (The Dallas News reports that Robert Spence dies in 2014. Tragically, he did not live long enough to see his award.)

MahanyLaw Fights Medicaid Fraud

Nationwide only a few hundred whistleblower lawsuits are filed each year. Few lawyers have the experience in filing these claims and even fewer in prosecuting them after they re declined by the government. Many lawyers may only see one False Claims Act case in their career. Do you want to trust your case to someone like that?

At MahanyLaw, representing whistleblowers is what we do. We aren’t afraid to take on big corporations and not afraid to fight for our clients.

For more information, contact attorney Brian Mahany at *protected email* or by telephone at (414) 704-6731. You can also visit our Medicare fraud page too. All inquiries are protected by the attorney – client privilege. There is never a charge or fee unless you hire us andwe make you money. We don’t get paid unless you get paid.